Top 10 Best Articles on Open Innovation in 2013

Based on the rankings of the SSRN database, we are able to create a ranking of the best – most downloaded – Open Innovation and related topics articles that have been published in 2013 so far. Therefore, this is a list of brand new theories, recent case studies, preliminary results and pioneering research.

  1. The Theory of Crowd Capital; Prpic, J., & Shukla, P.
    Abstract: We are seeing more and more organizations undertaking activities to engage dispersed populations through Information Systems (IS). Using the knowledge-based view of the organization, this work conceptualizes a theory of Crowd Capital to explain this phenomenon. Crowd Capital is a heterogeneous knowledge resource generated by an organization, through its use of Crowd Capability, which is defined by the structure, content, and process by which an organization engages with the dispersed knowledge of individuals – the Crowd. Our work draws upon a diverse literature and builds upon numerous examples of practitioner implementations to support our theorizing. We present a model of Crowd Capital generation in organizations and discuss the implications of Crowd Capital on organizational boundary and on IS research.
  2. Leveraging External Sources of Innovation: A Review of Research on Open Innovation, West, J. & Bogers, M.
    Abstract: This article reviews research on open innovation that considers how and why firms commercialize external sources of innovations. It examines both the “outside-in” and “coupled” modes of Enkel et al. (2009). From an analysis of prior research on how firms leverage external sources of innovation, it suggests a four-phase model in which a linear process — (1) obtaining, (2) integrating and (3) commercializing external innovations — is combined with (4) interaction between the firm and its collaborators. This model is used to classify papers taken from the top 25 innovation journals identified by Linton and Thongpapan (2004), complemented by highly cited work beyond those journals. A review of 291 open innovation-related publications from these sources shows that the majority of these articles indeed address elements of this inbound open innovation process model. Specifically, it finds that researchers have front-loaded their examination of the leveraging process, with an emphasis on obtaining innovations from external sources. However, there is a relative dearth of research related to integrating and commercializing these innovations.
    Research on obtaining innovations includes searching, enabling, filtering, and acquiring — each category with its own specific set of mechanisms and conditions. Integrating innovations has been mostly studied from an absorptive capacity perspective, with less attention given to the impact of competencies and culture (including not-invented-here). Commercializing innovations puts the most emphasis on how external innovations create value rather than how firms capture value from those innovations. Finally, the interaction phase considers both feedback for the linear process and reciprocal innovation processes such as co-creation, network collaboration and community innovation.
    This review and synthesis suggests several gaps in prior research. One is a tendency to ignore the importance of business models, despite their central role in distinguishing open innovation from earlier research on inter-organizational collaboration in innovation. Another gap is a tendency in open innovation to use “innovation” in a way inconsistent with earlier definitions in innovation management. The article concludes with recommendations for future research that include examining the end-to-end innovation commercialization process, and studying the moderators and limits of leveraging external sources of innovation.
  3. The Golden Circle of Innovation: What Companies Can Learn from NGOs When It Comes to Innovation, Spruijt, J.P., Spanjaard, T.G.S. & Demouge, K.
    Abstract: This paper examines the lessons that companies can learn from NGOs when it comes to the why, the how and the what of innovation. It explains innovation from the inside out: why is it important and what are the grand challenges? Followed by the how: in what way can innovation be managed and how does the innovation process look like in a modern economy?
    This introduction is elaborated on with two case studies within NGOs in The Netherlands, Fair2 and Liliane Foundation. It leads to several conclusions and hypotheses for further research.
  4. Sustainability-Oriented Innovation, Hansen, E.G. & Grosse-Dunker, F.
    Abstract: Sustainability-oriented innovation (SOI): the commercial introduction of a new (or improved) product (service), product-service system, or pure service which – based on a traceable (qualitative or quantitative) comparative analysis – leads to environmental and (or) social benefits over the prior version’s physical life-cycle (‘from cradle to grave’).
  5. Open Innovation and Organization DesignTushman, M., Lakhani, K. & Lifshitz-Assaf, L.
    Abstract: Abernathy’s (1978) empirical work on the automotive industry investigated relationships among an organization’s boundary (all manufacturing plants), its organizational design (fluid vs. specific), and its ability to execute product and/or process innovations. Abernathy’s ideas of dominant designs and the locus of innovation have been central to scholars of innovation, R&D, and strategic management. Similarly, building on March and Simon’s (1958) concept of organizations as decision making systems, Woodward (1965), Burns and Stalker (1966), and Lawrence and Lorsch (1967) examined relationships among organizational boundaries, organization structure, and innovation in a set of industries that varied by technology and environmental uncertainty. These and other early empirical works have led a diverse group of scholars to develop theories about firm boundaries, organization design, and the ability to innovate.
  6. Managing Crowd Innovation in Public Administration, Collm, A. & Schedler, K.
    Abstract: Governments all over the world have discovered the world of social media, for better or for worse. Whereas some of them are making every effort to prevent the unhierarchical and therefore uncontrollable (dissident) opinion-forming process in Web 2.0, others are looking for ways of putting the potentialities of this new opening-up of communication to use. One approach that is increasingly being tried out is opening up innovation processes in government. However, this opening-up of innovation processes is anything but trivial. It requires a thoroughly thought-out strategy and thus confronts government systems with extensive challenges if it is not to suffer the same fate as other unsuccessful attempts at reform in the past. In our essay, we reflect on the consequences of these challenges for public managers.
  7. Adopting Open Innovation to Stimulate Frugal Innovation and Reverse Innovation, Hossain, M.
    Abstract: Frugal innovation and reverse innovation have very recently emerged as interesting concepts. Frugal innovation is based on cost constraints to serve low-income customers in developing countries. When frugal innovation comes to developed countries and becomes commercially successful it is considered as reverse innovation. Recently, many companies, such as GE, Siemens, Procter and Gamble, etc. have engaged heavily in frugal innovation and in reverse innovation. Open innovation, on the other hand, has not been considered in the context of low-income customers in developing countries. We argue that using open innovation concept in developing countries may boast frugal innovation and reverse innovation. Consequently, quality product with low-income will be widely available not only in developing countries but also in developed countries. Hence, western companies need to change their long hold business strategies and reshape their business models. This study aims to illustrate why western companies need to be aware of and take step to become successful in the turbulent business world.
  8. The Impact of Visibility in Innovation Tournaments: Evidence from Field Experiments, Wooten, J.O. & Ulrich, K.T.
    Abstract: Contests have a long history of driving innovation, and web-based information technology has opened up new possibilities for managing tournaments. One such possibility is the visibility of entries – some web-based platforms now allow participants to observe others’ submissions while the contest is live. Seeing other entries could broaden or limit idea exploration, redirect or anchor searches, or inspire or stifle creativity. Using a unique data set from a series of field experiments, we examine whether entry visibility helps or hurts innovation contest outcomes. Our eight contests resulted in 665 contest entries for which we have 11,380 quality ratings. Based on analysis of this data set, we provide evidence that entry visibility influences the outcome of tournaments via two pathways: (1) changing the likelihood of entry from an agent and (2) shifting the quality characteristics of entries. For the first, we show that entry visibility generates more entries by increasing the number of participants. For the second, we find the effect of entry visibility depends on the setting. Seeing other entries results in more similar submissions early in a contest. For single-entry participants, entry quality “ratchets up” with the best entry submitted by other contestants previously if that entry is visible, while moving in the opposite direction if it’s not. However, for participants who submit more than once, those with better prior submissions improve more when they can not see the work of others. The variance in quality of entries also increases when entries are not visible, usually a desirable property of tournament submissions.
  9. Digital Scholarship: Exploration of Strategies and Skills for Knowledge Creation and Dissemination, Cobo, C. & Naval, C.
    Abstract: Widespread access to digital technologies has enabled digital scholars to access, create, share, and disseminate academic contents in innovative and diversified ways. Today academic teams in different places can collaborate in virtual environments by conducting scholarly work on the Internet. Two relevant dimensions that have been deeply affected by the emergence of digital scholarship are new facets of knowledge generation (wikis, e-science, online education, distributed R&D, open innovation, open science, peer-based production, online encyclopedias, user generated content) and new models of knowledge circulation and distribution (e-journals, open repositories, open licenses, academic podcasting initiatives, etc.). Despite the potential transformation of these novel practices and mechanisms of knowledge production and distribution, some authors suggest that digital scholarship can only be of significance if it marks a radical break in scholarship practices brought about through the possibilities enabled in new technologies. This paper address some of the key challenges and raise a set of recommendations to foster the development of key skills, new models of collaboration and cross-disciplinary cooperation between digital scholars.
  10. Dissenting State Patent Regimes, Hrdy, C.A.
    Abstract: Inventors who believe in open innovation should start applying for state patents instead of U.S. patents. Patenting at the state level prevents rivals from obtaining U.S. patents and generates valuable innovation spillovers in other states where the patent has no legal effect. It also creates a unique opportunity to force patent law reform from the bottom up. In exchange for filing fees, inventors can demand patents based on rules that support open innovation, like shorter terms in fast-moving industries, stricter disclosure requirements, or new restrictions on patenting by non-practicing entities. The lobbyists who stymie reform at the national level will have a much harder time blocking reform in all fifty states. Meanwhile, patent law’s dissenters need only one state to start granting patents in order to get courts, the media, and eventually Congress to pay attention.
The Golden Circle of Innovation

The Golden Circle of Innovation

Recently, a new article about the “The Golden Circle of Innovation” has been published in the SSRN. It provides an interesting way of combining Simon Sinek’s Golden Circle and some traditional literature on innovation science into the ‘Golden Circle of Innovation’.

Important notice: the full article can be downloaded freely from the SSRN database: The Golden Circle of Innovation: what companies can learn from NGOs when it comes to innovation.

Sinek’s Golden Circle

In his work he explains why everything starts with answering the why-question. And that also means innovation, as he states it: “Knowing your why is not the only way to be successful, but it is the only way to maintain a lasting success and have a greater blend of innovation and flexibility. When a why goes fuzzy, it becomes much more difficult to maintain growth, loyalty and inspiration that helped drive the original success” (Sinek, 2009).

Literature review of Innovation Science

Though not focusing on the why, how and what, Crossan and Apaydin have generated an overview of all relevant theories on innovation, resulting in a framework for innovation, as depicted below.

They mention two ‘dimensions of innovation’, both focusing on innovation itself and they mention several ‘determinants of innovation’, focusing on the way that innovation is accelerated and managed within organizations.

 

Golden Circle of Innovation

In attempt to combine both models with each other, we created a new framework: the golden circle for innovation.

The why of innovation: grand challenges, trends and mission statements

The why of innovation not only consists of leadership aspects; it also consists of embracing a mission that fulfills a more general need and therefore rectifies the necessity of innovation.

As Einstein once stated “If you always do what you always did, you will always get what you always got”, change is a prime economic driver. “It is practically impossible to do things identically” (Hansen & Wakonen, 1997) which “makes any change an innovation per definition” (Crossan & Apaydin, 2009).

But to what extend? Innovation drives economic growth and economic growth is a necessity because of the grand challenges that this world is facing, such as keeping up with international competition in a globalizing world – which in turn increases the need for higher productivity rates through both product innovation and process innovation (Parisi, Schiantarelli, & Sembenelli, 2006) – and megatrends such as climate change, social problems and the experience economy (Brainport, 2007; Sistermans, Maas, & Soete, 2005).

So how are great leaders capable of embracing this necessity for innovation and embed it into their vision for the company? Dyer, Christensen and Gregerson (Dyer, Gregersen, & Christensen, 2009) undertook “a six-year study into the origins of creative – and often disruptive – business strategies in innovative companies”. They found evidence that these leaders are visionary and much more facilitating the innovation process than actually coming up with innovations themselves. They are drivers of the process. Their study results in five ‘discovery skills’ that these inspirational leaders do 50% better than their non-creative counterparts:

  • Associating
  • Questioning
  • Observing
  • Experimenting
  • Networking

Concluding this paragraph, we can state that an effective answer the why of innovation consists of both a motivational mission statement that embraces one or more grand challenges that is functioning as the beating heart of the organization and inspirational leaders that are effective in the five before-mentioned discovery skills.

The how of innovation: innovation history, management and processes

Innovation has a basis in the product life cycle. Literature on this topic goes back centuries, but was first scientifically mentioned by Levitt (Levitt, 1965). In several revising studies, Perreault has elaborated on this model (Perreault, McCarthy, Parkinson, & Stewart, 2000). The model consists of the four phases a product or service are subject to: market introduction, market growth, market stability and decline. From an innovation perspective, Rogers has created a model that characterized final consumers to the extend in which they adopt to new technologies: The Diffusion of Innovation and Adopter Categories (Rogers, 2002).

In recent decades, a lot of research has been performed into innovation processes and the steps that regularly seem to reoccur in these processes. Literature reviews show there is little consensus about the number of phases and types of phases that should be part of a regular innovation cycle (Adams, Bessant, & Phelps, 2006; Gopalakrishnan & Damanpour, 1997).

De Brentani and Reid further elaborate on this model (Reid & De Brentani, 2004). They state that incremental, structured innovations are mostly the result of explicit and structured innovation processes and organizational processes. On the other hand, unstructured innovation processes (especially in the first one or two phases) often lead to disruptive or radical innovations. This is also called the ‘fuzzy front end’ of innovation (Brentani & Reid, 2012). Structure and organisation in later phases of innovation processes is always a pro for the success rate of innovation. In what way does the fuzzy front end of innovation differ with structured innovation?

  • There is continuous unstructured problem identification and unstructured opportunity recognition, whereas more structured innovation processes mostly use problem structuring and opportunity structuring and the early phases of the process (Hauser, Urban, & Weinberg, 1993; Leifer, O’Connor, & Rice, 2001).
  • Information collection and information exploration is generally outside-in oriented, whereas these steps are often inside-out oriented in structured processes.

This theory is further elaborated on by Mance, Murdock and Puccio, who have generated the following model (Puccio, Mance, & Murdock, 2010).
At this point, we have tried to deduce a model that comprises all before-mentioned models and consequently consists of four phases that each have the form of diverging-converging, but also as a total has to form of diverging-converging.
Similar like organizations growth models, the area of innovation management has been undergoing several improvements over the years. Rothwell has stated that market changes have contributed to these improvements and he distinguishes five different generations of innovation:

  • 1st generation: technology push
  • 2nd generation: market pull
  • 3rd generation: coupled innovation
  • 4th generation: integrated innovation
  • 5th generation: open innovation

Concluding this paragraph, we can state that as part of the how of innovation the processes should be oriented at following a pragmatic approach – such as problem finding, ideation, concepting and implementation – and should consist of both a structured inside-out approach and a more chaotic outside-in approach and that the management should be oriented at successful implementation and embedding new approaches to innovation management, such as open innovation.

The what of innovation: innovation as a process and as an outcome

There are various definitions of innovation. In an earlier article, we have used the following, fairly narrow defined, definition of Schilling: “Innovation is the act of introducing a new device, method or material for application to commercial or practical objectives” (M.A. Schilling, 2005; Spruijt, 2012). Crossan & Apaydin recently published a literature review on innovation literature, stating: “An unrestricted search of academic publications using the keyword innovation produces tens of thousands of articles, yet reviews and meta-analyses are rare and narrowly focused, either around the level of analysis (individual, group, firm, industry, consumer group, region, and nation) or the type of innovation (product, process, and business model)” (Crossan & Apaydin, 2009). To be specific, a current search on the keyword “innovation” results in 2.5 million articles on Google Scholar and thousands of articles using the keyword combination “definition of innovation”. Clearly, there isn’t a specific definition that is correct and many perspectives should be taken into account when defining innovation.

Crossan and Apaydin (2009) have identified different forms of innovation and grouped them around certain dimensions, some of them related to innovation as a process, some of them to innovation as an outcome. These dimensions are:

Innovation as a process:

  • drivers of innovation
  • levels of innovation
  • direction of innovation
  • source of innovation
  • locus of innovation

Innovation as an outcome:

  • forms of innovation
  • magnitude of innovation
  • referent of innovation
  • type of innovation

Golden Circle of Innovation

This leads to a more detailed model of the one we presented earlier:

 

Example case of NGOs

During the studies we followed the Liliane Foundation in an innovation project aiming to create more awareness amongst high school students about the problems in third world countries. They collaborated with a group of students from Avans University in order to identify the problems. These students are high school dropouts and were able to address the problem very efficiently. In a next step, the Liliane Foundation gathered a group of high school teachers to further develop ideas and alternative programs for awareness. In a third step, they collaborated with high school executives and university executives in order to create a platform for the implementation of the alternative programs and to find financial contribution. In the last phase, the implementation, they collaborated with all parties and included some external partners, mostly sponsors, in the roll out. The whole project was successfully launched within a year.

So what did they do? They used their why to find partners that were willing to help them executing the how. They found a way of ‘open innovation’ that is rarely seen in the corporate world, as depicted in the following figure.

Important notice: the full article can be downloaded freely from the SSRN database: The Golden Circle of Innovation: what companies can learn from NGOs when it comes to innovation.

Innovation Management Game: start-up of the year

Innovation Management Game: start-up of the year

Just like last year, we’ll publish a (small) list containing the most promising start-ups of the year. Obviously, we’ll share our opinion from the perspective of Open Innovation by answering the following questions:

  • Does the start-up contribute to the field of Open Innovation?
  • Does the start-up contribute to the field of Innovation Management?
  • Does the start-up contribute to the European knowledge economy?
  • Is the product/idea innovative?
  • Does it meet customer needs?

1st: Innovation Management Game

This year, the number 1 position goes to the Innovation Management Game. The Innovation Management Game is a business strategy simulation game for universities, higher education, business schools and corporate/executive trainings. The game centralizes topics like Open Innovation, Co-Creation, Innovation Management and Business Model Innovation.

Does the start-up contribute to the field of Open Innovation? 5/5
Does the start-up contribute to the field of Innovation Management? 5/5
Does the start-up contribute to the European knowledge economy? 5/5
Is the product/idea innovative? 4/5
Does it meet customer needs? 5/5
Overall: 4.8/5

2nd: Owlin

The second position goes to Owlin; a start-up in the financial sector that scans and analyzes social data and creates insights in financial opportunities before organisations and press offices would be able to recognize it themselves. Owlin is part of the Rockstart’s Acceleration Programme and received earlier this week €200.000 euro on venture capital.

Does the start-up contribute to the field of Open Innovation? 4/5
Does the start-up contribute to the field of Innovation Management? 4/5
Does the start-up contribute to the European knowledge economy? 5/5
Is the product/idea innovative? 5/5
Does it meet customer needs? 5/5
Overall 4.6/5

 3rd: Fosbury

Just a few months online, however already getting wide attention, Fosbury. A start-up, developed by two of the former founders of Yunoo, that enables organization to quickly segment and advertise coupons and vouchers to smartphones. We’re expecting this type of organisation to set back the traditional paper advertising markets before the end of 2013.

Does the start-up contribute to the field of Open Innovation? 4/5
Does the start-up contribute to the field of Innovation Management? 3/5
Does the start-up contribute to the European knowledge economy? 5/5
Is the product/idea innovative? 4/5
Does it meet customer needs? 5/5
Overall: 4.2/5

 

The Innovation Spiral: a closer look on Ernst & Young’s innovation model

The Innovation Spiral: a closer look on Ernst & Young’s innovation model

“Mention the word “innovation” and most people will think of extraordinary inventions created by solitary geniuses,” as mentioned in the first line of Ernst & Young‘s introduction to (one of) their innovation model(s). The article is titled: Innovation for Growth: a spiral approach to business model innovation. A promising introduction: it seems to include (organizational) growth theories, innovation management theory and business model theory. Again, after last year’s successful article on Deloitte’s Fast Growth Track, we’ll take a closer look on this model. Is this model theoretically justified? And if yes – assuming it’s an absolute yes – why does it work and how could it help you?

Business Model Innovation versus Innovation for Growth

First of all, let’s take a closer look at one of their general promises; on the one hand the article promises to innovate your business model. Or, as Henry Chesbrough has written it:

“There was a time, not so long ago, when ‘‘innovation’’ meant that companies needed to invest in extensive internal research laboratories, hire the most brilliant people they could find, and then wait patiently for novel products to emerge. Not anymore. The costs of creating, developing, and then shipping these novel products have risen tremendously (think of the cost of developing a new drug, or building a new semiconductor fabrication facility, or launching a new product into a crowded distribution channel). Worse, shortening product lives mean that even great technologies no longer can be relied upon to earn a satisfactory profit before they become commoditized. Today, innovation must include business models, rather than just technology and R&D.”

Source: Chesbrough (20o7): Business Model Innovation: it’s not just about technology anymore

So, the strategic focus of organizations has made a transition from product or service innovation towards business model innovation. That said, it surely doesn’t mean that service or product innovation is of less relevance: it has just shifted from a strategic level to a more tactical level. I got the opportunity ask (well, actually I’m filming, a colleague is asking the questions) Alexander Osterwalder about the place of innovation in the Business Model theory. This is what he said:

So the business model is not directly linked to innovation per se. Osterwalder:

“What it does is, it gives you a language. It’s very tangible, very visual, that will help you to create better conversations and it will make it easier for you to convince people of innovative possibilities.”

Concluding this part: it’s hard to focus on both Business Model Innovation and “Innovation for Growth”, because they are both executed at completely different levels.

Spiral Approach to Innovation: Innovation Processes

Well, so far the analysis of the title page. Let’s take a closer look at their PDF. I will include it here for your convenience:

[gview file=”http://www.ey.com/Publication/vwLUAssets/Growing_beyond_-_Innovation_report_2012/$FILE/Innovation-Report-2012_DIGI.pdf” height=”500px” width=”100%”]

I’ll directly skip to the folowing passage in the text:

“For the most innovative companies today, innovation isn’t a linear process. Rather, it’s a continuous cycle with ups and downs, inputs from different places, repetitions, failures, and many steps back and forth.”

Our guts feeling says that this statement is right. Indeed, it is. Innovation management is a process and many processes are theoretically seen as cycles.The origin of innovation studies lies within the product life cycle, firstly decribed by Lewitt in 1965 and later elaborated on by Perreault, for instance in 2000. It basically consists of four phases: market introduction, market growth, stability and decline. More focused on innovation, Rogers (1995) created a more specified model, ‘the diffusion of innovation and adopter categories.’

These models are singular, while innovation is repeatable. That can be shown by the following figure:

im3.png

 

The art of innovation, the process of innovation, is often referred to as innovation management. Innovation Management, or New Business Development, aims to enhance the possibility of technical and commercial success of new products and services (Schilling and Hill, 1998, Brown and Eisenhardt, 1997, Robert, 1994 and Clark and Fujimoto, 1991). The article Fast Track Growth for Innovation shows more indepth information into the different steps of the innovation process.
Typically, each process is cyclic, in order to enhance the room for reflection and dynamical growth. Francis Bacon in 1620 wrote about this explaining that every scientific process should consist of hypothesis – experiment – evaluation. In 1982 Deming developed the Plan-Do-Check-Act cycle, which we all have heard of. Cole, in 2002, was the first who explicitly refered to innovation as a cycle: Probe – Test – Evaluate – Learn. Bacon gave his cycle the name ‘inductive approach’ – basically the same as a spiral approach.

The Model Magnified: Is it good or could it be better?

So, the circle as round: yes, innovation should be a spiral approach. Below a look on Ernst & Young’s inductive spiral approach:

spiral.jpg

Wow, that’s something, isn’t it? At least it’s all-inclusive. Let’s take start with the second cycle: “Innovation Process”

  • Innovation Process: Ernst & Young have defined 5 steps: Intuition, Socialization, Ideation, Development and Exploitation. Clearly, it shows similarities with other – more theoretically accepted – models. The first two are quite surprising to me: Intuition and Socialization. The article explains: “Our research reveals a major shift in how leading companies go about innovation today. Intuition is the process of obtaining ideas, from anywhere and everywhere. Socialization happens when the idea is discussed and debated with other people, formally and informally.” I think this is a interesting perspective to look at the first step in innovation. On the one hand, it’s a modern way of looking at things: it’s fast and creates immediate action. It includes social media and people as a source for information and ideas, something that most models don’t include. On the other hand, it kind of simplified. Like (market) research and problem finding isn’t a scientific issue anymore, but more something that we come up by intuition. Perhaps intuition could play a small role, but it defintely isn’t how organizations repeatedly will structure innovation processes for the continuation of their core business. So yes, it’s a contemporary approach, but it’s not comprehensive.
    Even more, the relations between the different steps are quite strange. They all go two ways, except from the last one (and: is it actually the last one?), between exploitation and intuition. A two way arrow is a rather unfortunate way of showing that the process is iterative, meaing things could happen simultaneously in time. It definitely isn’t a two way process: after (unsuccesfull) exploitation, it’s not very logical to go back to the development phase, because the source of the problem needs to be re-identified and a new idea has to be created before redeveloping the product or service.
  • The other circles: to my opinion, the other circles try to include all exogene factors that could play a role in the primary innovation process. They are not cyclic at all and therefore it seems a forced way of including them in the model. It seems like a ‘sales pitch’ telling the clients all factors that could be taken into account during the advisory project. Perfectly plausible, but it should’t all be included in the model, because it doesn’t always make sense. For instance, the inner circle explain the different areas of innovation that could be addressed (processes, products and services and business model). Like explained before, these are three completely different strategic areas. Of course, they have to be addressed simultaneously, the influence each other, which explains their presence in this model. Also the outer circles don’t contribute to the value of the model. They are more seperate wheels (or clouds) around the model containing – very useful! – insights in innovation enablers and possible collaborators (read: possible clients).
  • The boxes: they only seem to offer information that didn’t fit inside the wheels. Please be honest, would you have missed them if they weren’t there?

Summing up, I’m not very enthousiastic by the spiral approach towards business model innovation of Ernst & Young. It’s mostly a marketing instrument. Though a good one: it includes all expertises that Ernst & Young could probably help you with and is therefore a useful instrument for explaining how they could of help (and not how innovative business models could be (re)developed).

A New Spiral Approach towards Innovation

Of course, I will not only analyse the current model, I will also propose a better one. One that takes into account the five steps of the innovative process, but also the recent developments in innovation systems. And I left out all unnecessary information. This is what I get:

cycle1.jpg

Obviously, when ‘walking’ through this innovation process, it’s not necessary to stay at one level and address each step for the same amount of time. It’s more often and iterative process than not, like the following figure shows:

cycle2.jpg

Please, let me know what you think of this analysis. Am I right, or completely wrong?

I would like to end with a quote from Maria Pinelli, Ernst & Youngs Global Vice Chair, which I actually find one of the best quotes I have recently bumped into:

“It is not enough just to be innovative. It is essential to be innovative all the time.”

Vodafone shares Headquarters with High-Tech Firestarters

On April 10th, Vodafone will open up part of their recently finished new regional headquarters in Amsterdam for high-tech potential. The first group of firestarters will derive from the cross-European competition Startupbootcamp. At maximum 10 teams will be approved for an acceleration phase in this brand new facility, offering them mentoring, financial support, expertise and tapping into a high-end brand name.

Entrepreneurs

According to Patrick de Zeeuw and Ruud Hendriks, co-founders of Startupbootcamp Amsterdam – the local intitiative as part of the cross-European network – “Startup teams from all around the world have sent in their applications. We are now busy rating all the applications. Teams with high ratings will be invited to pitch live or on Skype the following weeks.” The team went through a serious selection process: in February all participators had to pitch through Skype and live meetings, resulting in 20 teams being invited to the finals in March. During those finals 20 teams presented their ideas and 10 of them were finally selected for the intensive acceleration programme. The companies who will start on April 10th are:

boot-camp.jpg

Open Innovation Platform

According to Startupbootcamp Amsterdam these companies will set off in a 6 month project providing them free office space, free housing in Amsterdam, €17000,- funding per team, a sponsor package worth over €75000,- including fiscal advise, marketing advise, software, server space, testing in the Vodafone Innovation Lab and business model advise and the possibility to tap into the experience and knowledge of over 300 mentors in Europe who attached themselves to the project.

What Steve Jobs did (not do) for Open Innovation

Last autumn Steve Jobs passed away and everybody seems to agree: Steve Jobs was an inspiring and creative leader. His visionary view on technology stood at the basis of several radical innovations, which changed the lives of almost every single one of us. The fact that the iPhone, iTunes and the iPad are probably the three most important “disruptive innovations” of the last decade, surely isn’t a point of discussion. However, what does come to mind when debating about key issues of innovation at Apple’s is the fact if their way of innovation is future-proof. Apple has been blamed regularly that the company has proven to be more than average skilled to exploit the consumer by utilizing above-mentioned radical innovations. Which is an effective Business Model as long as there is a constant of flow of radical innovation finding its way through the funnel. But: is Apple’s methodology really sustainable?

Open Innovation:

Characteristic for a sustainable business model are the following 6 fundamental principles of Open Innovation:

  1. Not all the smart people in the field work for us. We need to work with smart people inside and outside the company.
  2. External R&D can create significant value: internal R&D is needed to claim some portion of that value.
  3. We don’t have to originate the research to profit from it.
  4. Building a better business model is better than getting to the market first.
  5. If we make the best use of internal and external ideas, we will win.
  6. We should profit from others’ use of our IP, and we should buy others’ IP whenever it advances our business model.

Let’s take a closer look on these elements:

Steve Jobs & Open Innovation:
  1. Steve Jobs has built its organisation around the best people. And the best people should work for Apple. The New York Times has published about this phenomenon:

    “In choosing key members of his team, he looks for the multiplier factor of excellence. Truly outstanding designers, engineers and managers, he says, are not just 10 percent, 20 percent or 30 percent better than merely very good ones, but 10 times better.”

  2. Apple’s perspective on tapping into external using doesn’t comply with the “rules” of Open Innovation. This results in a paradox, because Apple’s products (iTunes, iPhone) are fundamentally changing our options on sharing knowledge with each other. Former Apple employee, Tasra Mar, argues:

    Having worked there for a year, I know firsthand about the tight hold that is placed on knowledge and information—basically everything is on a need to know basis. No open discussions, forums or free conversations. That philosophy has paid off handsomely for them.

  3. As well as the former two principles, also this one isn’t acknowledged by Steve Jobs:

    “To all outward appearances, Steve Jobs believes that knowledge and information confer power only if they are carefully guarded.” (Xconomy)

  4. To be honest, on this matter Apple’s needs to receive compliments. Steve Jobs has been able to combine both elements: creating and succesfully implement new business models (such as iTunes: The iTunes Business Model and its widespread effects) and focusing on a very short Time-to-Market (How Apple manages time-to-market thanks to Open Innovation).
  5. At least to the outside world, Apple seems to be a very intransparant company. The company isn’t open about new developments and outsources only very small elements of the production process. The role of Steve Jobs in this strategy is much-discussed and important

    Jobs’ flippant communications style may not adversely affect Apple’s reputation or brand value, but a front-of-store employee telling a customer to “Please, leave us alone” surely would. (Rosanna Fiske).

  6. Sharing IP isn’t exactly one the stronger points of Apple, even not when it could contribute to Apples business. Apple is very conservative when it comes to sharing IP, while the current trends are moving opposite, such as Creative Commons, being Android an excellent example. The following table shows Android’s market share growing rapidly over the last few years. For those of you who now think: “Apples share isn’t doing bad as well”, I would like to point out that this is mainly due to the fact that iOS is an obliged system for a hugely popular device, not because the system itself is so popular.image
    (October Market Share report)
Conclusion: Steve Jobs is an innovator, not an Open Innovator per se.

Steve Jobs has proven to be running a very succesful company. However, that doesn’t answer the question: is Apple’s methodology sustainable and future-proof? Based on above-mentioned comparison: no, it isn’t. It seems to me that in the unfortunate case that Apple doesn’t continue creating disruptive innovations, their business model could fail in the near future. Or is Apple the perfect proof that Open Innovation may not be the only sustainable business model?